The Psychology of Being Scammed

Fascinating research on the psychology of con games. “The psychology of scams: Provoking and committing errors of judgement” was prepared for the UK Office of Fair Trading by the University of Exeter School of Psychology.

From the executive summary, here’s some stuff you may know:

Appeals to trust and authority: people tend to obey authorities so scammers use, and victims fall for, cues that make the offer look like a legitimate one being made by a reliable official institution or established reputable business.

Visceral triggers: scams exploit basic human desires and needs—such as greed, fear, avoidance of physical pain, or the desire to be liked—in order to provoke intuitive reactions and reduce the motivation of people to process the content of the scam message deeply. For example, scammers use triggers that make potential victims focus on the huge prizes or benefits on offer.

Scarcity cues. Scams are often personalised to create the impression that the offer is unique to the recipient. They also emphasise the urgency of a response to reduce the potential victim’s motivation to process the scam content objectively.

Induction of behavioural commitment. Scammers ask their potential victims to make small steps of compliance to draw them in, and thereby cause victims to feel committed to continue sending money.

The disproportionate relation between the size of the alleged reward and the cost of trying to obtain it. Scam victims are led to focus on the alleged big prize or reward in comparison to the relatively small amount of money they have to send in order to obtain their windfall; a phenomenon called ‘phantom fixation’. The high value reward (often life-changing, medically, financially, emotionally or physically) that scam victims thought they could get by responding, makes the money to be paid look rather small by comparison.

Lack of emotional control. Compared to non-victims, scam victims report being less able to regulate and resist emotions associated with scam offers. They seem to be unduly open to persuasion, or perhaps unduly undiscriminating about who they allow to persuade them. This creates an extra vulnerability in those who are socially isolated, because social networks often induce us to regulate our emotions when we otherwise might not.

And some stuff that surprised me:

…it was striking how some scam victims kept their decision to respond private and avoided speaking about it with family members or friends. It was almost as if with some part of their minds, they knew that what they were doing was unwise, and they feared the confirmation of that that another person would have offered. Indeed to some extent they hide their response to the scam from their more rational selves.

Another counter-intuitive finding is that scam victims often have better than average background knowledge in the area of the scam content. For example, it seems that people with experience of playing legitimate prize draws and lotteries are more likely to fall for a scam in this area than people with less knowledge and experience in this field. This also applies to those with some knowledge of investments. Such knowledge
can increase rather than decrease the risk of becoming a victim.

…scam victims report that they put more cognitive effort into analysing scam content than non-victims. This contradicts the intuitive suggestion that people fall victim to scams because they invest too little cognitive energy in investigating their content, and thus overlook potential information that might betray the scam. This may, however, reflect the victim being ‘drawn in’ to the scam whilst non-victims include many people who discard scams without giving them a second glance.

Related: the psychology of con games.

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Posted on June 17, 2009 at 2:05 PM • 38 Comments

Comments

Kensie • June 17, 2009 2:48 PM

The background knowledge finding parallels what I’ve observed in other disciplines as well: Some of the biggest suckers for overblown marketing hype are marketing execs who should know how it works.

kangaroo • June 17, 2009 3:39 PM

The last expected and unexpected contradict each other. The final point shows that they do a great deal of discrimination — but they’re so torn by their habitual involvement in scams (lottery, investments) that they find it difficult emotionally to ever say no. The emotions are coming from a different ‘agent’ than the one trying to resist the scam — often a habitual scammer.

It’s why marketing execs fall prone to marketing scams. They have to learn to lie to themselves about what they do for a living — which makes puts their cognitive functions into turmoil when the same methods are used against them. There ain’t no easier sucker than a salesman.

Fraud Guy • June 17, 2009 4:49 PM

Scammers and salesmen; from a recent trip to buy a new car:

“We’ve been around 35 years”
“Great deal, sweet car”
“We can extend this offer for today only”
“You know, take it home, bring it back, see how you like it”

More of a point on a continuum than a discrete set of behaviors.

pfogg • June 17, 2009 5:16 PM

“…it was striking how some scam victims kept their decision to respond private and avoided speaking about it with family members or friends. … Indeed to some extent they hide their response to the scam from their more rational selves.”

People do the same thing when engaging in behavior they know is risky, even if they’re sincerely hoping the risk will pay off (but particularly so if they’re more interested in the thrill of the risk or possibility of reward than in the actual outcome). The same applies to ‘more cognitive effort’ before they take the plunge.

Matthew • June 17, 2009 5:41 PM

I wonder how much “having more knowledge” in this context is a surrogate for “being more involved in that activity”, and that it’s correlation rather than causation at work here.

It makes some sense that people who are more regularly involved in prize drawings would have a higher risk of exposure to prize scams. It wouldn’t be their knowledge that’s the trigger, but the fact that they spend more of their time seeking out prize drawings.

Brian K • June 17, 2009 7:13 PM

Matthew: exactly

what does it mean to have “experience” or “knowledge” of “playing legitimate prize draws and lotteries.” Are you telling me that it is a skill to play the lotto, bingo, etc? I’d guess that someone who has “experience” and “knowledge” of those areas would be much easier to scam. A scammer could probably just post up outside of a bingo parlor and it would be like shooting fish in a barrel as people walked in and out.

Also, why would you think that someone with no investing experience would be easier to catch in an investing scam? If they don’t invest normally, why would they do it for the scam?

Davi Ottenheimer • June 17, 2009 9:49 PM

In our research and presentations on the Advance Fee Fraud or 419 scam we have tried to explain that “background knowledge” is a risk factor.

Not sure where you found the “intuitive suggestion” but for at least five years now the message has been that education, intelligence, and even training does not insulate you from scams. The news has supported this message as we see high profile scams leave even very savvy financial investors scratching their head.

I would have expected a psychological study to explain more about this, such as how overconfidence is formed and “knowledge” in one area is actually is used as a hook for a victim by building artificial trust.

Our research has focused on the cultural and linguistic tools used in the scams. The lack of knowledge in some key areas (those that are used to abuse trust) or even a psychological inability to process risk is what I would expect more of from psychologists.

Here’s an example of what I mean:

http://news.bbc.co.uk/2/hi/science/nature/8105963.stm

“…rats quickly learned an ‘optimal strategy’ – earning more pellets over the duration of the task by choosing the holes with smaller gains and smaller penalties.”

This suggests a neurological angle is also involved in how we respond to signals and patterns of reward.

uk visa lawyer • June 18, 2009 3:06 AM

Many years ago I read a study of people who’d been mugged, I think in New York, the interesting aspect for me was that 9 out of 10 people said something along the lines of ‘I knew I shouldn’t have walked down that street – I had a feeling as I turned on to it’.
The surprising stuff at the end relating to people talking to friends and family seems to broadly support the idea that we know we should follow our instincts.

BF Skinner • June 18, 2009 6:39 AM

Hmmmm interesting. You can replace the words “scam” and ‘con game’ with “marketing” and ‘advertising’ and have it mean the same.

Clive Robinson • June 18, 2009 7:06 AM

@

“The news has supported this message as we see high profile scams leave even very savvy financial investors scratching their head.”

I suspect that this is partly due to the “one of us” asspect.

Without other evidence we tend to tust those who are like ourselves or we have frequent contact with.

For instance most “investment scams” we hear about via prosecutions are where the scamer is a member of a social group or local and the victims are in the group or local either directly or by close association through someone who is.

It has been sugested that those with church type social connections are more likley to be scammed in this way, however I’ve not seen enough evidence one way or the other.

Sadly I suspect that anyone who partakes in social activities of any form is more likley to be scammed by “one of us” than by a stranger or a person who appears to have authority. Because to be part of a group usually means there is a developed social trust relationship.

Ken • June 18, 2009 7:20 AM

“people with experience of playing legitimate prize draws and lotteries are more likely to fall for a scam in this area than people with less knowledge and experience”

DUH! Those smart enough to know that a lottery is simply a tax on people with poor math skills also know fraud when they see it.

Clive Robinson • June 18, 2009 7:30 AM

@ Bruce,

“Another counter-intuitive finding is that scam victims often have better than average background knowledge in the area of the scam content…

…Such knowledge can increase rather than decrease the risk of becoming a victim.”

I suspect there is a simple answer to this.

Games of any sort (investments as well) have frameworks and rules by which they are played.

If you are reasonably familiar with the framework or rules then you make your judgments on the assumption they are in place.

A person who lacks familiarity with the framework or rules is likley to be more cautious.

The problem for the person with the assumption is that the scamers are not playing by the rules they are only pretending to. The better they appear to adhear to the rules the more likely the person with familiarity is to be taken in (it looks like a duck, quacks like a duck etc why assume it’s a goose).

Think of it as a poker game with marked cards (which are effectivly a covert side channel for those in the know).

If you are used to playing poker you know that it’s a game of averages ie it goes up and down with a few wild swings. Providing the scammers make it apear like a real game then the odd big win around the table is not unexpected to a moderatly experianced player.

However a novice is more likley to think “hey how come I only get small wins” and “why do they fold when I have a good hand”. Thereby they are also less likley to take on risk.

The other Alan • June 18, 2009 7:58 AM

“Another counter-intuitive finding is that scam victims often have better than average background knowledge in the area of the scam content…

…Such knowledge can increase rather than decrease the risk of becoming a victim.”

My aunt won $5000 US in a lottery. That primed the well. Thinking it was “easy”, she has probably spent 4 times that trying to win again.

Have a co-worker who had never been to Las Vegas. He and his wife stopped into a casino on their way through town. His wife won $4000 US in her first five minutes playing a slot machine. It was all he could do to drag her away from the “easy” money.

paul • June 18, 2009 9:57 AM

Uh. Standard lotteries and prize drawings have a negative expected value. That’s why states use lotteries to fund education and other services. That’s why charities use them to raise money.

So “experience” with standard lotteries and prize drawings is “experience” with giving money to people in exchange for a good feeling and a small-but-nonzero chance of getting something back, although in the longterm almost always less than you put in. The internet scams simply lop off the “small-but-non”.

Pete Austin • June 18, 2009 10:54 AM

A few years ago I was visited by about 100 double glazing salesmen over a 2-year period. Yes, really! They were targeting my street because I live in a neighborhood of older houses which are close together.

Their tactics were exactly those reported for these scammers.

Regarding general marketing, my personal hate is the “small steps of compliance” tactic from salesmen, where they start out talking sense and then gradually add extras to increase the price. It starts slow and so can take a long time to recognize – wasting time for everyone – then when you slam on the brakes the standard response seems to be to switch straight into attempted bullying.

Jason • June 18, 2009 11:44 AM

@Paul Renault
“There a document: Social Control in Scientology, by Bob Penny, which provides interesting/disturbing parallels.
http://www.cs.cmu.edu/~dst/Fishman/Xenu/scs.html”

Thanks for that.

I had no idea how much Scientology is like a Serious version of the Cult of the Subgenius as far as the emphasis on the Hard Sell and manipulation.

Bryan Fury • June 18, 2009 3:29 PM

It’s especially likely to happen when you’re in a desperate situation. Take our current housing crisis for example, people are falling constantly for equity scams: when-its-too-good-to-be-true-foreclosure-equity-scams/

David • June 18, 2009 4:14 PM

@uk visa lawyer: I think we may have a case of memory bias. If I think a street looks unsafe, and go down it anyway, I’ll forget about it. If I get mugged, I’ll remember my misgivings. It’s also perfectly possible to remember such warnings that never actually happened.

@Bryan Fury: When you’re in a desperate situation, taking a long-odds gamble may be a good idea. If you will have to declare bankruptcy if you can’t come up with $10K more than you have, buying into a deal that might get you that $10K but is probably a scam is rational, since all outcomes without that $10K are equivalent.

Gweihir • June 18, 2009 8:02 PM

Primary skills in scam detection are

  1. The ability to do a reverse pausibility check, i.e. does this make sense for the other side?
  2. The ability to see ones own importance in the greater scheme of things realistically, i.e. whould they actually contact me?
  3. Knowledge of communication modes, e.g. no lottery informs its participants by email.
  4. Pattern matching. Especially Nigerian Money Scam and variants can often be already recognized from the subject.

Especially people that have a self-image that is off are easy prey.

David • June 18, 2009 8:25 PM

“Many years ago I read a study of people who’d been mugged, I think in New York, the interesting aspect for me was that 9 out of 10 people said something along the lines of ‘I knew I shouldn’t have walked down that street – I had a feeling as I turned on to it’.”

Sounds like de Becker … if not, it certainly illustrates his point.

“You can replace the words “scam” and ‘con game’ with “marketing” and ‘advertising’ and have it mean the same.”

Very glib, but while the pursuasive tactics in the two cases do not differ, the defining feature of a “scam” is that it is fraud; the seller is misrepresenting his product.

“Life is hard. It’s harder when you’re stupid.” –John Wayne

Anonymous • June 19, 2009 12:24 AM

For a good example of a scam, google “better trades scam”.

“Better Trades” just targeted Pittsburgh with their “Financial Freedom Expos”. Adding “scam” and running through google cuts to the bottom line. Sadly, I expect they’ll gross over $100k this week, robbing gullible folks who can’t afford it.

Jonadab the Unsightly One • June 19, 2009 8:01 AM

All three “surprising” paragraphs make sense if you think about it.

In the first place, people fall victim to scams because they are making their decisions based on emotions. If they were making the decision rationally, they wouldn’t fall victim. Even someone who’s not very bright can generally tell when an offer is obviously too good to be true, if they think about it objectively. The problem scam victims have is that when the offer is being made to THEM, their emotions take over and make the decision, ignoring any protests the rational mind might have to offer.

The “background knowledge” in the second point, IMO, is largely incidental. I’m almost sure, even without having seen the paper, that the issue is not directly with knowing things objectively about the subject, but rather with having acted in a certain way in the past (hence, “experience”, which is NOT the same thing as knowledge, though it does correlate). People who have experience playing the lottery, obviously, are people who have an emotional need to win a bunch of money, so they’re more vulnerable to scams that promise this. (Even “you MAY have already won” might hook some of them in, as Publisher’s Clearing House discovered decades ago.) Playing the “is this a scam or is this real” odds is just another form of lottery. People who have experience with investments, similarly, are people who have some money to invest and are looking for ways to make it bigger, and perhaps they’re not emotionally altogether satisfied with its progress; there must be a better return to be had somehow…

As for the third one, there are two things going on here. In the first place, most scams are so obviously unrealistic, anybody who’s willing to reject a too-good-to-be-true offer doesn’t NEED significant cognitive effort to toss them in the wastebin. A few people, like my dad, enjoy looking at them in detail to figure out exactly what the scam is, but even if they can’t figure it out, they still know it’s a scam. Most people just throw them out. But the victims, as you know, are making the decision with their emotions, not with their rational mind. The thing is, most people don’t like to admit to themselves that they’re making a decision emotionally against their better judgment, so they spend some time thinking up reasons why the choice they want to make, which they intuitively know is dubious, could actually be right after all. If it’s a decision about what behavior is ethical, this behavior is called “justifying” and is a well documented part of human nature. Whether the problem with the decision is one of ethics or one of wisdom, people do the same thing: they already know what they WANT to do, but they have to talk themselves into it so they can operate under the delusion that they’ve made the right choice.

Jonadab the Unsightly One • June 19, 2009 8:06 AM

Oh, about experience versus knowledge: run the experiment with people who know a lot about lotteries because they’ve helped run one, rather than because they’ve bought tickets, and see what results you get. Or, better yet, use people who have studied lotteries from a mathematical perspective, e.g., because they needed a final paper topic for a prob-and-stat class. My money says, if they don’t have a history of actually buying tickets, merely knowing about lotteries won’t make them any more likely than the next guy to fall for a bogus lottery scam.

Mike • June 19, 2009 11:28 AM

‘ “You can replace the words “scam” and ‘con game’ with”marketing”
and ‘advertising’ and have it mean the same.”

Very glib, but while the pursuasive tactics in the two cases do not
differ, the defining feature of a “scam” is that it is fraud; the
seller is misrepresenting his product. ‘

Well by that definition, a large (most?) amount of advertising is a
scam. Off the top of my head, “unlimited minutes”, “fast, easy, and
cheap”, “Connect anytime, anywhere”, “best ever”, all are
misrepresentations of a product. I’ve heard the suggestions of
reversing the advertising slogans to get an actual product’s
description. It works distressingly often.

averros • June 22, 2009 2:19 AM

Mike —

Well by that definition, a large (most?) amount
of advertising is a scam. Off the top of my head,
“unlimited minutes”, “fast, easy, and cheap”,
“Connect anytime, anywhere”, “best ever”, all
are misrepresentations of a product.

Yep. And the fact that we are seeing this kind of crap in ads says a lot about effectiveness of courts and their regard to the basic property rights.

Brian • June 22, 2009 7:42 AM

Some of the posted comments are negative and it’s unfortunate because the use of persuasion can be completely ethical. Understanding psychology and applying it ethically is just plain smart when it comes to business, parenting or any other human interaction.

I think this quote from The Art of WOO hits the nail on the head:

“An earnest and sincere lover buys flowers and candy for the object of his affections. So does the cad who succeeds to take advantage of another’s heart. But when the cad succeeds, we don’t blame the flowers and candy. We rightly question his character.”

Persuasion is not bad any more than flowers or candy are bad. Look at the character of the person before determining whether to do business with them.

Mellified Man • June 22, 2009 3:32 PM

There’s a great BBC drama series called “Hustle” that centers around a team of con artists. Each episode centers around a different scam run by the team — and virtually all of the items listed above, and quite a few more, are explicitly used in the context of the episode. Though the characters and situations are fictional, the “rules of the con” are regularly explained as they relate to the ongoing con. Well worth a watch … it’s an entertaining show. It’s available on DVD (and AMC network in the States — AMC’s website for the show is here : http://www.amctv.com/originals/hustle/ ).

Secret Patrol • June 25, 2009 5:10 PM

If the potential $ loss is perceived by the subconscious mind as being worth less than the gratifying physical endorphin or adrenaline release driven by either a) psychological pain or b) excitement then money loses and body wins every time.

This is why people are addicted to jumping out of planes, riding superbikes, stealing things or even playing online RPG games they absolutely hate.

In the case of video games the continuous psychological pain of dealing with annoying people or situations ensures a steady stream of endorphin (heroin / morphine like) release and keeps you playing.

In the case of subconsciously knowing you are likely victim to a scam the desire for chemical releases in the body outweighs the cost of being a victim and of course there are people addicted to being a victim, just like the game players.

Bob Hildebrand • July 15, 2009 7:36 AM

Reminds me of the various publishers who would package magazine subscriptions with lottery prize offerings. Huge reward and, hey, “No purchase necessary!” but we all know that it can’t hurt to buy a subscription and improve our chances for a bazillion dollars. Sales and scams, fine line of seperation.

Scott • July 22, 2009 9:01 AM

You noted “Another counter-intuitive finding is that scam victims often have better than average background knowledge in the area of the scam content.” Your latest Crypto gram reference to Magne Jorgesens paper, and your comment that the “bias becomes stronger with familiarity” is totally supoprted. Great reading!

VICTIM • August 9, 2009 7:07 PM

I was web searching to find out laws on using psychology against someone to control them. I am in deed a victim. i luckily am strong enough that they did not succeed on getting me to commit suicide, although it ONCE crossed my mind. Thankfully I feel stronger than ever, yet still need help. Sneaky and smart as they are I need help as for what to do! I just feel it is too late, they are too far ahead.

Overwatch • June 29, 2018 5:33 PM

In some cases (I know of at least one) the scammer will actually ask people to keep quiet, I guess because they’re worried that if their victim speaks to a loved one about it and the loved one expresses their doubts, something will start sinking in and they’ll cut the scammer off.

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